JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, right Wolf. You would expect a debate over the pros and cons of attacking Iran to have a mixed reaction. But this panel on Capitol Hill found basically very few pros and a lot of cons.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): Even with its military stretched to the limit in Iraq, the U.S. retains the ability to launch punishing air strikes against Iran -- targeting both terrorists and nuclear facilities.

But what would the air war accomplish?

Not much, according to military strategists who testified before a House subcommittee on national security.

COL. LAWRENCE WILKERSON (RET.), FORMER ADVISER TO COLIN POWELL: The more widespread strikes, while devastating -- they would be -- would solidify a nation of 70 plus million people -- a great number of whom are under 35 years of age -- a nation that is anything but solidified. And the uniting factor would be nationalism and a visceral hatred for America.

COL. SAMUEL GARDINER, U.S. AIR FORCE (RET.): We can destroy three to five years of construction. We know how long it took to build those. But the effect on the nuclear program, we may accelerate it. As a strategist, I would say you don't take military action when you don't know the outcome.

MCINTYRE: In fact, the strategists argue, going to war with Iran would just reinforce the belief it must have nuclear weapons to protect itself.

PAUL PILLAR, FORMER CIA OFFICIAL: Many would see the U.S. action as a blow not against proliferation of weapons, but against a Muslim country with a regime that Washington doesn't happen to like. So the dominant global consequence, in my judgment -- especially in the broader Muslim world -- would be an increase in anti-Americanism.

MCINTYRE: The experts predict the ranks of Iran's Revolutionary Guard would swell, its support of terrorism would increase and any moderates would be undercut. Still, some experts argue the military option should not be taken off the table because without it, Iran simply has no incentive to compromise.

ILAN BERMAN, AMERICAN FOREIGN POLICY COUNCIL: Iran is not likely to bend to sanctions if it thinks all it has to do is weather sanctions and then there's nothing else is coming down the pike. One of the world's most dangerous regimes should not be allowed to acquire the world's most dangerous weapon.

(END VIDEO TAPE)

MCINTYRE: But even the lone voice in favor of maintaining the military option as a threat called it "deeply flawed and dangerous" and says it has to be weighed very carefully about the situation of living with Iran as a nuclear power -- Wolf.

BLITZER: All right.

Jamie, thank you.

A former Iranian nuclear negotiator, by the way, is being charged with passing secrets to the West. That comes as Iran's hard-line president calls critics of his nuclear policy traitors.

Here's our senior Middle East correspondent, Aneesh Raman.

ANEESH RAMAN, CNN CORRESPONDENT: Wolf, an enemy within -- that's what Iran's government is now labeling a former senior nuclear negotiator. His name is Hossein Mousavian and Iran's Intelligence Ministry today said they had evidence Mousavian had given sensitive information, presumably about Iran's nuclear program, to foreign governments. Among them, the British government. Today British officials said no comment. And this is still the early stage of this investigation. Iran's judiciary will have to weigh in next as to whether there is enough evidence to charge Mousavian.

Now, his supporters say this is all about political intimidation. He is a friend, Mousavian, of Akbar Rafsanjani, a rival to Iran's president, and worked under the former reformist president, Mohammad Khatami. But what we wait for next really are the words from Iran's supreme leader -- does he weigh on the side of Mousavian, who was detained earlier this year under similar charges but then released? Or does he support Iran's president?

There is clearly a debate within Iran about how much compromise they should have in order to end the nuclear dispute. And what the supreme leader says about this case could be a key indicator into that discussion -- Wolf.

BLITZER: Aneesh Raman reporting for us.

Thank you.

One top political leader is tracked down and hauled away by police. Another remains under house arrest right now. But as anger explodes, Pakistan's president is digging in his heels. Ahead of a meeting with a top U.S. diplomat, he's already warning -- and I'm quoting now -- "I don't take ultimatums from anyone.

CNN's Zain Verjee is in Lahore.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, President Musharraf continues his crackdown on all opposition to him. But that's not stopping protesters. They're still out on the streets.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): Outrage is spilling across the streets of Pakistan -- tear gas and rock throwing. Protesters clashed with police in Karachi. Shops are closed, some destroyed. Some journalists are on a hunger strike -- wearing black gags to protest the media clampdown. Religious protesters march in solidarity with their cause. In Islamabad, lawyers hit the streets, keeping up their campaign against President Pervez Musharraf. And in Lahore, student demonstrations -- a sign the resistance is growing.

Legendary cricket player and opposition leader Iman Khan was arrested when he joined them. He's been in hiding since emergency rule was declared. CNN spoke to Khan before his arrest and he accused Musharraf of tyranny.

IMRAN KHAN, OPPOSITION LEADER: He is an absolute dictator. He wants absolute power. He's trying to squash all the things so that he can then go ahead with his plan of ridding the elections.

VERJEE: Musharraf is sticking it his guns, saying he won't give in to ultimatums and has no plans to lift the state of emergency any time soon.

PRES. PERVEZ MUSHARRAF, PAKISTAN: Emergency is not meant to rig elections. We are inviting any amount of foreigner observers to Pakistan to see.

VERJEE: Former President Jimmy Carter, who monitors elections around the world, says his teams won't go unless Musharraf takes some serious steps forward. "No international observers would participate without the full restoration of the constitutional order, including the independent judiciary. Musharraf is promising he'll take off his uniform by the end of the month and begin a new presidential term as a civilian.

(END VIDEO TAPE)

VERJEE: The U.S. is pushing Musharraf to do that fast. State Department officials say that Musharraf has overplayed his hand with emergency rule and they say the deputy secretary of state, John Negroponte, will be here later this week to try it help him find a way to climb down -- Wolf.

CAROL COSTELLO, CNN CORRESPONDENT: And Zain Verjee, we lost Wolf.

He is in Las Vegas.

We're having some technical problems.

We're going on with this afternoon's news.

America's closest ally is a top terror target and now Britain is boosting its defenses with a massive new security campaign.

CNN's international secretary correspondent, Paula Newton, has the latest from London.

(BEGIN VIDEO TAPE)

PAULA NEWTON, INTERNATIONAL SECURITY CORRESPONDENT: Wolf, sweeping new security measures here in Britain -- the kind that people will be taking notice of in their everyday lives.

(voice-over): Outside Britain's houses of parliament, crude but sturdy concrete barriers. This is a hard target ringed by security. But inside...

PRIME MINISTER GORDON BROWN, BRITAIN: In advance of the national security strategy.

BROWN: Companies that are responsible for crowded places will now be given detailed and updated advice on how they can improve their resilience against attack.

NEWTON: They will be rolling out more concrete barriers, blocking traffic, more boots on the ground. And new security measures for rail travel -- spot checks for people and baggage. But these security plans go much further and include enhanced design and planning for buildings, trying to bomb-proof them, keep glass and metal from becoming airborne shrapnel.

UNIDENTIFIED MALE: We mustn't do the terrorist's job for them. You know, our travel should be as easy as possible. We don't want this constant fear of terrorism.

NEWTON: But this former intelligence officer says the risk of future attacks is real and Britain is still trying to come to grips with it.

UNIDENTIFIED MALE: You cannot turn Europe's cities into green zones like Baghdad. Even if you could, it doesn't work.

NEWTON: In the government's arsenal, though, security measures officials are not willing to disclose right now. They're afraid of giving terrorists any tip off to the kind of high tech surveillance already in use here.

(END VIDEO TAPE)

NEWTON: Wolf, significant to the kinds of security measures -- high tech surveillance that they won't be telling us about for security reasons very important here. They have the legal latitude that doesn't exist in the United States to really implement a lot of that high tech surveillance -- Wolf.

BLITZER: All right, Paula, thank you.

Paula Newton reporting.

Let's go back to Jack Cafferty.

He's in New York for The Cafferty File -- Jack.

CAFFERTY: This is becoming very confusing, you know.

Here's a quote: "You don't need a stethoscope to hear the heartbeat of the public." That was New York Governor Eliot Spitzer, who announced today that he's throwing in the towel on his plan to issue driver's licenses to illegal aliens. Spitzer concluded New York cannot successfully address the issue on its own. Instead, it needs to be dealt with on the national level. Gee, I wonder when that will happen.

He added that the federal government has lost control of our borders, allowing millions of illegal aliens to enter the country without a solution on how to deal with them. Spitzer floated this idea back in September. It was immediately met with a howl of criticism -- a recent poll showing 70 percent of New Yorkers opposed to this plan.

It also became a part of the national debate. Who can forget the presidential campaign -- the Democratic debate and New York Senator Hillary Clinton bumbling around and stumbling rather badly when she was asked during that debate if she's in favor of driver's licenses for illegal aliens. It seems to be a fairly straightforward question.

Clinton was missing from Spitzer's briefing today, even though it was held in Washington, D.C. Clinton's office said she couldn't attend because she had a scheduling conflict.

Here's the question -- what's your reaction to New York Governor Eliot Spitzer dropping his plan to give drivers licenses to illegal aliens?

E-mail caffertyfile@CNN.com or go to CNN.com/caffertyfile -- Wolf, are you going to be with us for the rest of the program?

BLITZER: She had an affair with the police commissioner and says she was fired to protect Republican presidential candidate Rudy Giuliani's campaign. We have the details of her massive lawsuit.

Also, Supreme Court Justice Sandra Day O'Connor -- there's a surprising and very emotional twist in her husband's struggle with Alzheimer's.

And environmental outrage -- why is a major airline flying empty planes across the Atlantic?

Stay with us.

You're in THE SITUATION ROOM.

We're live from the Cox Pavilion on the campus of the University of Las Vegas.

(COMMERCIAL BREAK)

BLITZER: We're back live now from the Cox Pavilion on the campus of the University of Nevada, Las Vegas.

It's all supposed to be secret and unannounced -- inspectors try to pass through airport security lines with fake I.D.s, weapons and explosives. But now Congress wants to know whether the security tests themselves are fake.

That's the question Congress had. The head of the Transportation Security Administration told them no.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: There is no tip-off and no cheating.

MESERVE: What, then, is the explanation for this April 2006 e- mail, sent it hundreds of TSA personnel, with the subject line "notice of possible security tests." It includes descriptions of testers and advice on how to beat them. Hawley says it was sent by mistake and recalled 13 minutes later. Not everyone is buying it.

REP. AL GREEN (D), TEXAS: If it is true that there were tests taking place -- and the language in the e-mail makes reference to the tests -- Mr. Hawley, how can you say that there was no cheating?

How can you say that there was no tip-off?

MESERVE: Former Homeland Security Inspector General Clark Kent Ervin, now a CNN analyst, says every manager involved should be fired and prosecuted.

CLARK KENT ERVIN, FORMER DHS INSPECTOR GENERAL: We've got to send a strong signal that this cannot be tolerated. Literally the security of the United States is at stake here.

MESERVE: The TSA says it does rigorous, honest tests all the time, asking screeners to find real bomb components concealed in carry-ons and clothing 2,500 times a day.

(END VIDEO TAPE)

MESERVE: But previous investigations have confirmed that screeners in San Francisco and Jackson, Mississippi were alerted to TSA tests in 2004. And the DHS inspector general is checking to see if there is a broader pattern of cheating -- Wolf.

BLITZER: All right, thank you, Jeanne, for that.

Busted in an illegal gambling ring with ties to the mob -- run out of a high stakes casino poker room. Almost two dozen people are arrested and charged.

CNN's Deborah Feyerick is joining us now live -- Deb, what else can you tell us about what happened and where. DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Wolf, authorities are saying that some of the poker dealers that were actually involved in the mob-run sports gambling ring can be seen on casino surveillance tapes taking and paying out bets. And those bets were placed on college and pro football and basketball games.

New Jersey police are saying the alleged criminal enterprise brought in some $22 million since March of 2006. That's when detectives received a tip there was illegal gambling going on at the Borgata Casino. The attorney general says five reputed mob guys with links to a Philadelphia crime family recruited casino employees who worked in a poker room. And they include a supervisor, three dealers and a bartender all allegedly involved in running the day to day operations. And a poker room supervisor at the nearby Tropicana Casino was also arrested.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: What also makes this case particularly startling and brazen is the fact that six of the defendants charged today hold licenses that have been issued by the Casino Control Commission. These are employees of the Borgata, largely, and there's one individual who is an employee of the Tropicana, who worked as a supervisor in the Tropicana poker room. Three of them total are supervisors in poker rooms -- two at the Borgata and one at the Tropicana.

(END VIDEO CLIP)

FEYERICK: Now, a spokesman for the Borgata tells CNN that "At no time was integrity of the casino's opponents ever compromised." Authorities say the mob associates enticed casino workers by giving them a percentage of the $22 million in bets. All are being charged with promoting gambling or money laundering. And, as you said, some two dozen people involved in this ring. And New Jersey has very tight regulations over its casinos for just this reason -- the fear that organized crime would make inroads into these operations -- Wolf.

BLITZER: In Atlantic City.

All right, Deb Feyerick, thanks very much for that.

Republican presidential candidate Rudy Giuliani and disgraced New York police commissioner Bernard Kerik -- we're going to show you how they're now to a $100 million defamation lawsuit.

Plus, in jail because Yahoo! cooperated with the Chinese government. Now there's a settlement with the families of a Chinese dissident and a journalist.

Stay with us.

You're in THE SITUATION ROOM.

We're live today from the Cox Pavilion on the campus of the University of Nevada, Las Vegas. (COMMERCIAL BREAK)

BLITZER: Let's check back with Carol Costello.

She is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Carol, what's going on?

COSTELLO: A couple of things, Wolf.

An American man is behind bars in Mexico, accused of being a serial rapist. Police arrested Gustavo Haro at a Mexican town near the Texas border. They say he crossed into Mexico repeatedly over the last year and raped at least 13 women in their homes. Haro allegedly tricked some victims by asking for jumper cables for his stalled car.

France's president is taking action to avoid more of this -- hundreds of miles of traffic at a standstill around Paris. It's the result of a massive strike by the country's transportation workers. The strike brought most subway, bus and train service to a halt today. The French president, Nicholas Sarkozy, is reportedly gearing up for talks with the unions, which are protesting his plans to reform pensions.

Dirty and getting dirtier -- China's state media says more than 30 billion tons of sewage was dumped into the Yangtze River in 2006. That is a 3 percent increase over the previous year and that would be a record high and equal to 900 million more tons of domestic and industrial sewage. The Yangtze is the world's third largest river.

And A Washington, D.C. judge who lost a controversial lawsuit against a dry cleaners has now lost his job. City officials decided not to reappoint Roy Pierson as administrative law judge. Earlier this year, Pierson sued a dry cleaners for $54 million. The cleaner's big offense -- it lost a pair of his pants. Pierson says the business did not live up it its motto, "satisfaction guaranteed."

Back to you, Wolf, in Las Vegas.

BLITZER: I guess he's not satisfied, either.

All right, thanks very much for that.

A Republican presidential candidate linked to a scandalous lawsuit.

(BEGIN VIDEO CLIP)

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: I don't respond to the story at all. I have -- I have -- I don't know anything about it and it sounds to me like a kind of a gossip column story more than a real story.

(END VIDEO CLIP)

BLITZER: We're going to have details of the $100 million defamation claim and why the plaintiff says she was pressured to protect Rudy Giuliani.

Also, a bittersweet love story -- why former Supreme Court Justice Sandra Day O'Connor says she's happy her husband has a new love.

And jumbo jets making transatlantic flights without a single passenger onboard. We're going to show you what these so-called ghost flights are all about.

Stay with us.

You're in THE SITUATION ROOM.

We're reporting live today from the Cox Pavilion on the campus of the University of Nevada, Las Vegas.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, reports coming in from Chile about dozens of people possibly dead in a tunnel collapse caused by that massive magnitude 7.7 earthquake centered about 800 miles north of Santiago.

Also, Judge Michael Mukasey sworn in as the 81st attorney general of the United States. President Bush was on hand for the purely ceremonial occasion. Mukasey officially took office Friday so he could spend the weekend catching up.

And banana importer Chiquita slapped with an $8 billion lawsuit by relatives of Colombians killed by a right-wing paramilitary group. They accused Chiquita of financially supporting the rebels. Chiquita says it was forced to pay protection money.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

We're live from the Cox Pavilion, on the campus of the University of Nevada in Las Vegas.

The worlds of politics and publishing colliding in a scandalous new lawsuit. The plaintiff alleging she was pressured to lie to protect Rudy Giuliani.

CNN's Carol Costello is joining us live once again -- Carol, what's behind and who's behind this lawsuit?

COSTELLO: Who's behind the lawsuit, Wolf?

Judith Regan, the publisher responsible for the book by O.J. Simpson, "If I Did It," and who was eventually fired by News Corp's publishing company, Harper Collins. But that's not what stands out in her lawsuit. No. It is Fox News' alleged fondness for Rudy Giuliani.

(BEGIN VIDEOTAPE) COSTELLO (voice-over): It's a 70-page lawsuit that reads like a political thriller. Judith Regan, the publisher fired by a division of News Corp last year, alleges she was pressured by executives to lie about an affair with Bernard Kerik when hew was New York City police commissioner. She claims News Corp wanted to protect its favorite presidential candidate, Rudy Giuliani, who hired Kerik.

GIULIANI: I don't respond to the story at all. I have -- I have -- I don't know anything about it and it sounds to me like a kind of like a gossip column story more than a real story.

COSTELLO: But Regan thinks it's an important part of her suit against News Corp, claiming unfair dismissal and defamation and $100 million in damages. And those who know her reputation say she won't drop the suit easily.

JOSE MARTINEZ, "NEW YORK DAILY NEWS": She's known to be feisty. She is known to be a woman who doesn't pull any punches -- aggressive, take no prisoners. She's hard driving. And there's a reason she got to the top of her profession.

COSTELLO: Regan says she told a News Corp executive in 2001 she was having an affair with a very married Bernard Kerik and they had used an apartment near ground zero -- one some New York City workers claim was donated for use for weary workers at ground zero. It's something Kerik won't talk about.

BERNARD KERIK, FORMER NEW YORK CITY POLICE COMMISSIONER: The only thing I'll say is the apartment was not for rescue workers at ground zero. That's all I'll say and leave it at that.

COSTELLO: But those allegations and the fact that Kerik has now been indicted on fraud charges have been dogging Rudy Giuliani, who suggested him for homeland security secretary in 2004.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: I regret the fact that I didn't do a better job of vetting him and I've apologized to the president for that.

COSTELLO: In her lawsuit, Regan alleges Newscorp executives knew Giuliani would catch political heat for recommending Kerik if her affair came to light. She claims an executive advised Regan to lie to investigators concerning Kerik.

(END VIDEOTAPE)

But you know it's unclear from the lawsuit whether Regan was actually questioned by federal authorities and had to lie about Kerik's appointment as homeland security secretary to allegedly protect Rudy Giuliani's reputation. What we do know is that Roger Ales who runs Fox News is close to Giuliani. He was the media consultant for his first mayoral run. But again, Newscorp says Regan's claims are preposterous. Wolf? WOLF BLITZER, CNN ANCHOR: All right. Carol, thank you.

The family of retired Supreme Court justice Sandra Day O'Connor is going public with a very emotional story involving her husband who is stricken with Alzheimer's disease and a bitter sweet new chapter in his life. Let's bring in Mary Snow. She's watching this. What is the situation all about involving John O'Connor?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, John O'Connor is 77 years old. His condition has deteriorated to the point where he needs full-time care and his son is sharing a story that is hitting home for many families dealing with Alzheimer's.

(BEGIN VIDEOTAPE)

SCOTT O'CONNOR, JUSTICE O'CONNOR'S SON: Hey, dad.

SNOW: Scott O'Connor, the son of retired Supreme Court justice Sandra Day O'Connor is sharing very personal details about dealing with his father's Alzheimer's. John O'Connor was diagnosed with the disease 17 years ago. Justice O'Connor had been his main caretaker. When she retired from the high court in 2005, she said she wanted to spend more time with her husband. But their son told Phoenix station KPNX that eventually her mother accepted her husband had to enter a nursing facility.

O'CONNOR: Visits were very challenging for all of us and for him because all he wanted to talk about was, that's it. I want out. I mean, I want it to be over. How can you help me do that? It was basically suicidal talk.

SNOW: Scott O'Connor says that changed when his father started up a romance with another woman at the center. A development, he says, his mother accepted.

O'CONNOR: Mom, you know, was thrilled that dad was relaxed and happy and comfortable living here and wasn't complaining.

SNOW: Romantic relationships among Alzheimer's patients are not all that uncommon says those who work with patients and families.

JED LEVINE, ALZHEIMER'S ASSOCIATION: And understand that this is not a malicious behavior. It's not done purposefully to hurt the spouse, but it's part of that need to connect.

SNOW: And that need to connect is portrayed in the movie "Away From Her."

UNIDENTIFIED MALE: You made a new friend?

UNIDENTIFIED FEMALE: Oh, that's just Aubrey. The funny thing is, I knew him years and years ago.

SNOW: The Alzheimer's Association estimates that 5 million people in the United States have Alzheimer's and it commends the O'Connor's for helping raise public awareness. PETER REEED, ALZHEIMER'S ASSOCIATION: It goes a long way at helping put a real face on a condition that is very misunderstood by the general public.

(END VIDEOTAPE)

SNOW: Now, retired justice Sandra Day O'Connor declined a request for comment. The Alzheimer's Association says the number of Americans with Alzheimer's is expected to grow to about 15 million people by the middle of the century. Wolf?

BLITZER: All right, thank you, Mary.

According to the Alzheimer's Association, by the way, some of the leading signs of the disease include memory loss, difficulty performing familiar tasks, problems with language, disorientation to time and place and poor or decreased judgment. But, keep in mind, any of these can happen to some degree in healthy people. Only a doctor can tell if they indicate Alzheimer's disease.

The Osmond family is weighing in on fellow Mormon and presidential candidate Mitt Romney. On "LARRY KING LIVE," Donny and Marie and their brother Jimmy express hope that Americans won't make Romney's religion a factor in next year's race.

(BEGIN VIDEOTAPE)

LARRY KING, LARRY KING LIVE: Mitt Romney's running for president, running strong in some polls in some states and the fact that he is a Mormon has brought a lot of attention to him and a lot of questions about the faith. How do you feel about that race?

JIMMY OSMOND: First of all, I think he's a great man and I think it's important to judge the person on the person. But I think there are a lot of misconceptions as to what people think our beliefs are. And as people become more aware of our beliefs, it doesn't become an issue at all.

DONNY OSMOBD: And I think it's been absolutely wonderful for the Mormon Church to have Mitt out there because people have a little bit of curiosity.

KING: He spoke to religious leaders of other faiths.

MARIE OSMOND: It was the first time that a candidate was questioned because of his faith, because he was catholic. So, I think, you know, to answer your question, I hope that times have -- I hope we've grown up since then. I hope people look at the person and what they've done.

OSMOND: Yeah, but the presidential race, I mean, it's a popularity vote. It can be a little bit like a circus.

(END VIDEOTAPE)

BLITZER: The Osmonds also talked to Larry about the recent loss of their father, George Osmond. The interview, by the way, airs tonight in its entirety on "LARRY KING LIVE," 9:00 p.m. eastern.

And he's rolling out the red carpet for the democratic debate. I'll ask Las Vegas Mayor Oscar Goodman what he thinks of this crop of presidential candidates. It's coming up in our next hour. Stay with us. You're in THE SITUATION ROOM. We're live today from the Cox Pavilion from the campus of the University of Nevada, Las Vegas.

(COMMERCIAL BREAK)

BLITZER: We're back here live from the Cox Pavilion on the campus of the University of Nevada, Las Vegas. This is where the democratic presidential candidates will be debating tomorrow night. We'll have special coverage, of course, right here on CNN.

But we're following other important news right now including environmentalists who are outraged over news that British Airways has been flying empty jumbo jets across the Atlantic creating tons of pollution without moving a single passenger. CNN's Ali Velshi is joining us now live. Ali, what is the story behind these so-called ghost flights?

ALI VELSHI, CNN CORRESPONDENT: Hey, Wolf. This one is getting a lot of attention. Here is what's going on. British Airways cancels a flight from London to the U.S. because it doesn't have enough flight attendants to staff that flight. But it doesn't need flight attendants to fly cargo. So the airline loads up the belly of the plane and sends it across the ocean. Now if you were one of the passengers bumped from that flight, you actually get to watch your flight take off and head out without you. The plane, by the way, returns with a crew from the other side and full of passengers. Now, this is what BA offered us by way of an explanation. They said, "Recently, we've experienced a lack of availability of cabin crew for certain flights. It has, on occasion, been necessary to fly an aircraft with only pilots and cargo on board to minimize disruption to customers." Now, Wolf, this seems a wee bit upside down to me from a business perspective. British Airways has cargo planes for cargo and in an age of increasing attention to pollution, the idea of burning hundreds of thousands of gallons of jet fuel and expending all of that fuel seems a little wrong. Wolf, here's what's really wrong. British Airways yesterday increased its fuel surcharge for flights between the U.K. and U.S. by ten pounds. So passengers on a return trip now pay 96 pounds. That's about $200 over and above the fare. Some of that is going to fuel planes that are flying with no passengers. Wolf?

BLITZER: Any indication of how much longer this is going to go on?

VELSHI: I suspect the attention they're getting from this story means it will come to an end very soon.

BLITZER: You're probably right, Ali, thank you very much. Ali Velshi reporting. The U.S. military is doing a lot of gas guzzling of its own. Ships, planes and tanks help make it America's largest energy consumer. Now the Pentagon is trying to do something about its pain at the pump. Let's get details from CNN Pentagon correspondent Barbara Starr.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, if you think it's expensive to fill your gas tank, just consider what the military is going through right now. From Iraq to the high seas, every day the U.S. military guzzles 340,000 barrels of oil in the tanks, ships and planes it uses.

LAWRENCE KORB, CENTER FOR AMERICAN PROGRESS: If they were a country, they would be the 38th largest consumer of oil.

STARR: And with oil near $100 a barrel, the Pentagon estimates each $10 a barrel increase in oil costs the military and the taxpayer an additional $1.3 billion a year. To pay the tab, money is sometimes borrowed from other vital military programs.

KORB: If you look at it in total, you're getting close to $20 billion a year that the Pentagon has to spend on oil.

STARR: The biggest user? The air force. Last year it spent $8 billion a year on fuel, more than half of the military's total energy bill. The Pentagon is trying to go green just a bit. In September, the air force flew this B-52 bomber using fuel made not from oil but from coal. At China Lake Naval Air Weapons Station in California, the navy runs one of the largest geothermal-powered generating stations. Next month, this new solar power array will begin supplying nearly a third of the power for Nellis Air Force base in Nevada. But with rising oil prices, energy savings are eaten up. In 2005, the military used 14 million barrels of oil less than what it used two years earlier but paid $3 billion more for it.

UNIDENTIFIED MALE: Rising oil prices will only make our efforts more expensive and increase the pressures in trying to make do with what little money we have at this point.

STARR: The week before the war in Iraq began back in 2003, the cost of oil was just under $40 a barrel. Now, it's nearly $100 a barrel. And the cost of all of this to Americans is about $124 billion, according to a new congressional report. Wolf?

(END VIDEOTAPE)

BLITZER: All right. Thank you, Barbara Starr for that.

Yahoo reaching a settlement with the families of Chinese dissidents the company helped send to jail. Can it repair its shattered image?

And find out why republican presidential candidate Senator John McCain is so upset over a CNN report. Stay with us. You're in THE SITUATION ROOM reporting live today from the Cox Pavilion on the campus of the University of Nevada, Las Vegas.

(COMMERCIAL BREAK)

BLITZER: We're back live now on the campus of the University of Nevada, Las Vegas. The internet giant Yahoo announced its reached a settlement with the families of the jailed Chinese dissident and journalist who sued the company for cooperating with the Chinese government. That cooperation landed the two men in jail. Let's turn to CNN's John Voss. He's in Beijing. John?

JOHN VOSS, CNN CORRESPONDENT: Wolf, to many bloggers and activists here in China, Yahoo's out of court settlement does little it repair the company's reputation. They say the Internet giant sold out to the communist government and can't be trusted.

(BEGIN VIDEOTAPE)

VOSS: From this small, cramped Beijing apartment for the past nine years, Li Xinde has blogged about official corruption across China. "They say there is harmful information on my site and with that one sentence they can shut me down," he told me. By they he means his Internet service providers, who are required by law to tell authorities about what's deemed harmful information. And that's a long, long list. And if they don't do it, then they can be fined and shut down by the government. That's the argument Yahoo made before Congress. Just following local laws when it handed over e-mail details of a Chinese journalist who was later jailed for leaking so called state secrets. For Li, it was a breach of trust from a western company who many here never expected. "I used to have a Yahoo e-mail account, but I don't use it any more. Neither do a lot of my friends. We feel it can't be trusted." But Yahoo is not alone. All western internet companies have made compromises for access China's 130 million net users. But activists like Zhou Qin say they no longer believe the internet will be a force for democratic change. "When the internet first started, I was full of hope, now I'm full of disappointment," he says. New technology has approved the capability. Yahoo has now made an out-of-court settlement with the families of the Chinese dissidents who its claimed who were jailed after the Internet giant cooperated with the communist government. That is unlikely to repair the company's badly damaged reputation.

REBECCA MACKINNON, HONG KONG UNIVERSITY: Yahoo has been on the cover of two different human rights reports. They've been shamed globally. They've been called to the carpet twice in the U.S. Congress. They've taken a huge hit to their global image.

(END VIDEOTAPE)

VOSS: Part of Yahoo's mission statement is to connect people with the world's knowledge but that doesn't apply to mainland China, especially with the communist government unlikely to loosen its control over the Internet. Wolf?

BLITZER: Thanks very much, John Voss, in Beijing.

Let's go back to Jack Cafferty. He has the Cafferty file in New York.

JACK CAFFERTY, CNN CORRESPONDENT: Big story in New York. The question this hour, Wolf, is what is your reaction to New York Governor Eliot Spitzer dropping his plan to give drivers' licenses to illegal aliens?

Priscilla in Florida writes, "Finally, Spitzer has gotten the message the American people are against the proliferation of illegal aliens in the country and what the voters think of the stupid government officials who bend over backwards to please the illegal aliens over the American people."

Corinne in California, "I'm sure it's just a coincidence that he decided this right before the democratic debate. I wouldn't be surprised if he and Clinton got together and decided that this is a bad idea."

Bob in Florida writes, "The idea behind this plan was, as we all know, to get a handle on who was in the state. That's not a bad idea. The press made it a political issue."

Mike in Florida writes, "Actually, it's kind of refreshing. When was the last time any government official listened to the public? Now, if we can just get the democratic Congress to do what we sent them to do.

Dee writes, "Spitzer is typical of our elected officials. He has hoof and mouth disease. He thought he'd get the Hispanic vote but he forgot about the law-abiding American citizens who are sick of this kind of nonsense. For many of us, our vote will go to the one who cares more about American citizens than he does about illegal aliens or their children."

And Jonathan in Chicago, "I'm glad the governor is finally seeing the will of the people, now, when will he be apologizing to Lou Dobbs?" Wolf?

BLITZER: We're going it be talking more about this in the next hour in our roundtable, Jack. It's clearly an issue that's dogging politicians across the country. This whole issue, not only of drivers' licenses for illegal immigrants but illegal immigration, it's a subject that is clearly on the mind of a lot of Americans.

CAFFERTY: I think the politicians have grossly underestimated that the level of emotion attached to this issue. When they were trying to get this immigration reform package through the Congress a few months ago, the reason it failed is because the constituents of these folks in Washington said, we don't trust you, the federal government, to secure the borders. It is a huge issue and that and the war I think, will probably determine the outcome of this election next year.

BLITZER: You know, because it's really amazing when you think about that coalition earlier in the year that had been put together in Washington involving the president and Dick Cheney, for example, the entire Bush administration and then in the Congress, the leadership on the democratic side, Ted Kennedy and John McCain on the republican side, there was a powerful alliance calling for comprehensive immigration reform that simply failed in the face of a lot of anger out there.

CAFFERTY: Well, it was perceived as amnesty and there is a bedrock conviction among the American people, at least that I hear from on a daily basis, that the government is less interested in the concerns of middle class American citizens than they are in the interests of people that further their political agenda and indirectly the issue of illegal immigration plays into both democratic and republican hands. Republicans have support from the big businesses that hire them. Democrats court the votes of the Hispanic community and the average middle class American citizen says, what about me? You've made it clear, you don't give a dam about me and that's the crux, I think, of the illegal immigration thing.

BLITZER: I can tell you have only been in Nevada today, here in Las Vegas, but it's a big issue in this state and I'm assuming a big issue in the debate tomorrow night. We'll check that out. Jack, stand by, you're coming up not only for the Cafferty file but our roundtable in the next hour, as well.

Also coming up, what does Lou Dobbs want to see in tomorrow's democratic presidential debate here in Las Vegas? You know what? I'm going to ask him. He's standing by to join us live.

And democrats are trying again to force President Bush to change the course of the war in Iraq. Will they finally succeed?

And find out why republican presidential candidate John McCain is accusing CNN of bias. Stay with us. You're in THE SITUATION ROOM. We're reporting live today from the Cox Pavilion on the campus of University of Nevada, Las Vegas. We'll be right back.

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BLITZER: Lou Dobbs is here in Las Vegas getting ready for his show in one hour. You're in Vegas. I'm in Vegas. I guess there is a presidential debate here tomorrow night. You probably heard about it, right behind us. Give us a little preview. What do you want it hear from these seven democratic candidates?

LOU DOBBS, CNN ANCHOR: How about a discussion of public education that is failing an entire generation of Americans? How about where they're going to get the money for about $1.5 trillion in investment and infrastructure, what they're going to do about border security, stopping illegal immigration, when will they end the nonsense and comprehensive immigration reform? When are they going to have a real discussion about strategy and consequences on the global war on radical Islamists? And name the name of our enemy in the global war on terror? Radical Islamist. Those are among the things I'd like to hear.

BLITZER: You've got some specific questions.

DOBBS: Oh, absolutely.

BLITZER: I know you're going to be watching closely. Top of the hour we're going to have a full report on Eliot Spitzer, the governor of New York's major announcement.

DOBBS: One of my closest friends.

BLITZER: You've been going after him for a while. Some will say Lou Dobbs single handedly almost made him reverse course and decide, you know what; it's not a good idea to give drivers' licenses, any form of drivers' licenses to a million illegal immigrants potentially in New York State. What do you think of his decision today?

DOBBS: Well, his decision, coming as it does one day really before those democratic presidential candidates be grilled by a well- known journalist, I think it's no coincidence. I think, secondly, I'm glad that he came to his senses. It's an irresponsible policy. It doesn't reflect either good judgment or any regard or respect for the citizens of the state he was elected to serve. So, if this is the beginning of a -- Eliot Spitzer's education as chief executive. It's terrific. If it's expedience, then his name will be in the news again. For me the issue as he has put it is closed and I'm well satisfy with the result.

BLITZER: The whole notion, though, of drivers' licenses in New York State, the illegal immigrants are not going it get them, but they do get them in a bunch of other states around the country and that's been in place for some time.

DOBBS: And we've been reporting on it for four years and we were also reporting on the fact that Tennessee, North Carolina, rolling back those drivers' licenses because they found instead of ending fraud, instead of stopping law breakers, it, in fact, encouraged them and massive fraud was the result. In Oregon, the governor is about to roll that program back from everything we can gain from the governor's office there. We are continuing to focus on this. This is irresponsible policy. It is opening the door to all sorts of national security issues, obviously, but importantly, as well, it opens a door to massive, massive voter fraud because nearly every state in this union is on the honor system.

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